Market Monitor – October 2018

November 2nd, 2018, by Richard O'Sullivan

Global equity indices fell sharply in October with the MSCI World index down around 5.4% over the month.
The FTSE 100 index fell below 7,000 during the month but finished October at 7,128, representing a loss of nearly 5% for the month and nearly 10% below its all-time high achieved earlier this year. Since the start of the year the benchmark UK index has generated a loss of around 3.9% with the FTSE All-share index down by 4.4%.
The S&P 500 index fell by 5.0% in October but remains positive since the start of the year, with currency movements amplifying a small positive return from the Dollar denominated US index. Both the Yen and the US Dollar continued to appreciate against Sterling over the month and Sterling’s relative weakness has enhanced returns from many global indices since the start of the year. The MSCI World index is down slightly in local currency terms, but this translates into a positive total return of 3.4% for UK investors.
Many global indices are down in value since the start of the year. The MSCI Europe ex UK, Japan and Asia Pacific ex Japan indices fell by between 6.1% and 8.4% in October. The Europe ex UK index has fallen by 5% since the star of the year whilst the MSCI AC Asia Pacific ex Japan, and MSCI Emerging Markets are down by more than 10%. The Chinese Shanghai composite index is down by over 25% since it peaked in late January.

The yield on the 10 year US Treasury index rose above 3.2% in early October, but as global equities fell some bond markets rallied. The benchmark 10-year UK Gilt yield rose from 1.6% to over 1.7% in early October before falling sharply to finish at around 1.4%. The FTSE Actuaries UK Conventional Gilts All Stocks index has made a small loss for the year to date of 0.4%. Japanese and Swiss 10 year government debt yields remain close to zero and German 10 year bonds yield around 0.25%.

The Brent Crude spot price fell by around 7% in October, reversing much of the gains made in the previous month. Oil prices remain highly volatile over time and whilst the oil price has risen by 50% over the last three years it is down by over 36% since 2013. Gold prices recovered from recent weakness registering a positive return of slightly less than 4% but are down around 1% for the year.

Read the full Market Monitor here…